In recent times, we have witnessed a push towards restoring sensory perception to upper-limb amputees, which includes the whole spectrum from gentle touch to noxious stimuli. These are essential components for body protection as well as for restoring the sense of embodiment. Notwithstanding the considerable advances that have been made in designing suitable sensors and restoring tactile perceptions, pain perception dynamics and its decoding using effective bio-markers, are still not fully understood. Here, using electroencephalography (EEG) recordings, we identified and validated a spatio-temporal signature of brain activity during innocuous, moderately more intense, and noxious stimulation of an amputee’s phantom limb using transcutaneous nerve stimulation (TENS). Based on the spatio-temporal EEG features, we developed a system for detecting pain perception and reaction in the brain, which successfully classified three different stimulation conditions with a test accuracy of 94.66%, and we investigated the cortical activity in response to sensory stimuli in these conditions. Our findings suggest that the noxious stimulation activates the pre-motor cortex with the highest activation shown in the central cortex (Cz electrode) between 450 ms and 750 ms post-stimulation, whereas the highest activation for the moderately intense stimulation was found in the parietal lobe (P2, P4, and P6 electrodes). Further, we localized the cortical sources and observed early strong activation of the anterior cingulate cortex (ACC) corresponding to the noxious stimulus condition. Moreover, activation of the posterior cingulate cortex (PCC) was observed during the noxious sensation. Overall, although this is a single case study, this work presents a novel approach and a first attempt to analyze and classify neural activity when restoring sensory perception to amputees, which could chart a route ahead for designing a real-time pain reaction system in upper-limb prostheses.